AI Meets the Physical Economy
Thoughts on the Market
This episode explores insights from Morgan Stanley's Industrials Conference, focusing on two major physical economy shifts: the commercializ
Key takeaways
- Autonomous trucking is entering a critical 12 to 18 month period preceding serial commercial production.
- Aurora has completed nearly half a million miles of fully driverless, revenue-generating operations on US highways.
Main topics
- Autonomous trucking commercialization
- AI-driven power demand
Notable quotes
The debate is now moving from does this work to can this work for me.
Conclusion
The successful scaling of AI and autonomous logistics is fundamentally
Transcript preview
Speaker 3 (0:00) Welcome to Thoughts on the Market. I'm Michelle Weaver, Morgan Stanley's U.S. thematic and equity strategist. Speaker 1 (0:05) I'm Speaker 2 (0:05) Ravi Speaker 1 (0:06) Shankar, Speaker 2 (0:06) Morgan Stanley's U Speaker 1 (0:07) .S. trade transportation analyst. And I'm Dave Arcaro, Morgan Stanley's utilities, power, and clean energy analyst. Speaker 3 (0:14) Today, what we learned at Morgan Stanley's Industrials Conference about the changing economics of autonomous trucking and the increasingly tight power market supporting the AI build-out. It's Friday, September 25th at 10 a.m. in New York. Speaker 3 (0:29) Now, I know we're all on the road taking meetings post-conference, so the audio might sound a little bit different, but we wanted to bring you the latest from our annual industrials conference that recently concluded in Laguna Beach, where two themes really stuck out. The growing physical infrastructure demands behind AI, particularly power, and the shift in autonomous trucking from proving the viability of the technology to commercializing it at scale. Ravi? After roughly a decade of development, you've said autonomous trucking is entering a critical 12 to 18 month period ahead of serial commercial production. What's changed and why is the debate shifting from whether the technology works to whether it can be commercialized at scale? Speaker 2 (1:09) I think for 10 years, the industry has been focused on making the technology work. But with players like Aurora now putting up almost half a million miles of fully driverless revenue generating operations on public highways in the US, day and night, rain and shine for different customers, with people like Kodiak also running several trucks in revenue generating service for customers like Atlas, I don't think there is much debate on the technology. itself. And so I think the debate is now moving from does this work to can this work for me, where the next steps are going to be dotting I's and crossing T's on the path to actually pressing these trucks into commercial service rather than having to prove that it works in the first place. Speaker 3 (1:56) Your research suggests that autonomous trucking can deliver roughly a 20 % lower cost per mile, while higher utilization could be an even bigger source of value. What are the key assumptions behind that math? And what still needs to happen operationally for fleets to capture those benefits? Speaker 2 (2:12) Yeah, so we recently updated our TCO math on autonomous trucks and published a North American Insight, where we revised and revisited our views on autonomous trucking with a lot of proprietary data in there as well. And part of that, new TCO math, again, I think revisited some of the changes in the split of operating costs of trucking over the last several